CLAREMONT, CA—The Acquisition Group has paid big to break into the Claremont market. It purchased a 22,750-square-foot single-tenant triple-net Sprouts Farmers Market from HCLARE LLC at a 5% cap rate. The purchase included the Acquisition Group's assumption and defeasance of a $600,000 loan, which it paid off to obtain new financing. Additionally, Sprouts has only seven years remaining on its lease term.

“Single-tenant triple-net properties are in very high demand right now. This property was definitely well received because of that and because Claremont is an upscale area with a very limited amount of competition,” Fariba Kavian, an SVP at NAI Capital, tells GlobeSt.com. “However, there were obstacles. There were only approximately seven years remaining on the lease term and there was an existing loan that had to be assumed or defeased. We still had multiple offers on the property and ultimately chose a buyer that did not have a financing contingency.” Kavian represented the seller in the transaction.

After the defeasance, the sales price was $12.8 million at a 5% cap rate. “That was definitely a very good transaction price for the seller, especially given the obstacles that we had,” says Kavian. “Claremont is a very established area with an average household income over $100,000. It is an irreplaceable infill location, so there is a barrier to entry for new businesses coming in. That is why we were able to attain this higher sales price. Although there are only seven years remaining on the lease term, we were able to get the buyer to feel comfortable with the fact that Sprouts had no place to go.”

Located at 835 W. Foothill Blvd. in Claremont, the property is located in a center co-anchored by a Chase Bank. Originally constructed in 1965 and renovated in 2007, the property is in close proximity to Claremont Colleges and has more than 17,000 people living within a 1-mile radius.

The Claremont market rarely sees properties trade hands, which is likely why this property, despite its issues, had such strong interest. The adjacent Upland market, however, has seen a boost in activity. An institutional investor, for example, recently purchased a 42-acre land site in the market, where land values have dramatically increased in the last few years. Another institutional joint venture, Canyon Capital Realty Advisors' Canyon Catalyst Fund and Sack Properties, purchased a 137-unit apartment complex in the area.